It also underscores the bullish approach analysts are taking regarding the company’s pioneering role in the rapidly evolving field of accelerated computing.
What Happened: Goldman Sachs analysts Toshiya Hari and Anmol Makkar highlighted “various data points from the broader ecosystem that point to sustained strength in demand for accelerated computing.”
A pivotal element of their bullish stance is NVIDIA’s successful foray into AI monetization, particularly its contributions to Microsoft Corp. (NYSE:MSFT)’s Azure and Meta Platforms Inc. (NASDAQ:META) revenue streams.
Analysts spotlight the optimistic outlook on AI-related capital investments, with Meta’s capex guidance adjustment from $30-35 billion before $30-37 billion being a case in point. This not only reflects a growing commitment to AI but also boosts NVIDIA’s growth narrative.
“We believe Nvidia will remain as the industry gold standard for the foreseeable future given its robust hardware and software offerings and, importantly, the pace at which it continues to innovate,” analysts at Goldman Sachs assert.
This conviction is backed by the staggering growth of NVIDIA’s market share in the Data Center Compute sector, from roughly 15% five years ago to an overwhelming 75% today.
According to Goldman Sachs, projected increases in data center revenue by 14% in the next year are highlighted as pivotal for NVIDIA’s overall revenue surge, with an anticipated uptick of 19.8% in 2024 and 21% in 2025.
Geopolitical Challenges For Nvidia
With an eye on the evolving geopolitical landscape, Goldman Sachs anticipates NVIDIA’s unveiling of export-compliant GPUs tailored for the Chinese market.
This move, expected to be confirmed in the upcomingearnings call aligns with the U.S. government’s updated export regulations and underscores NVIDIA’s adaptability to geopolitical shifts.
Risks: Despite the optimistic outlook, Goldman Sachs does not shy away from outlining potential risks, including fluctuations in AI infrastructure spending, further export restrictions, and supply chain uncertainties, among others.
Yet, NVIDIA’s valuation, according to Goldman Sachs, suggests an…